Egypt's non-oil private sector activity shrank for the 27th month in a row in February as surging inflation and obstacles to importing from abroad extended business travails, a survey showed on Sunday.
The S&P Global Egypt Purchasing Managers' Index (PMI) strengthened to 46.9 in February from 45.5 in January, but was still well below the 50.0 threshold that marks growth in activity.
"After hitting a four-and-a-half-year high in January, the rate of purchase price inflation softened to the lowest since October, as firms suffered to a lesser extent from weaker exchange rates and rising import costs," S&P Global economist David Owen said.
The PMI's sub-index for overall input prices slipped to 62.7 from January's 72.3, and that for purchase prices fell to 63.9 from 72.7.
Headline inflation in Egypt surged to a five-year high of 25.8% in January, the state statistics organisation reported last month.
"Amid the bleak outlook, non-oil companies opted to reduce their purchasing activity sharply in February, S&P Global said. The rate of contraction, however, was the softest in four months.
Egypt is still short of foreign currency despite the Egyptian pound depreciating by nearly 50% since March and its signing of a new $3 billion rescue package with the International Monetary Fund in December.
The sub-index for future output expectations worsened to 52.5 from 53.1 in January, nearing an all-time low.
"Notably, just 5% of survey respondents forecasted a rise in output, amid suggestions that current headwinds, including weak demand, severe inflation, import controls and foreign currency shortfalls, are likely to continue throughout 2023," S&P wrote.
